Financial Performance - For the three months ended December 31, 2024, net income was $104.7 million, while adjusted earnings were $105.8 million [129]. - The diluted EPS for the three months ended December 31, 2024, was $1.80, and the adjusted EPS was $1.82 [129]. - For the three months ended December 31, 2024, net income was $104.7 million, or $1.80 per diluted share, compared to $151.8 million, or $2.62 per diluted share for the same period in 2023 [133]. - Non-interest income for the three months ended December 31, 2024, was $27.8 million, a significant decrease from $124.1 million in the same period of 2023 [132]. - The efficiency ratio for the three months ended December 31, 2024, was 47.20%, compared to 34.54% for the same period in 2023, indicating increased operational costs relative to income [132]. - The return on average assets for the three months ended December 31, 2024, was 1.74%, down from 2.90% in the same period of 2023 [132]. - Income before income taxes for the Banking Business Segment was $152.9 million for the three months ended December 31, 2024, down from $214.6 million in the prior year [157]. Assets and Deposits - The company has approximately $23.7 billion in assets and $37.7 billion in assets under custody and/or administration at Axos Clearing LLC [115]. - Total assets increased to $23.7 billion as of December 31, 2024, up from $22.9 billion as of June 30, 2024, and $21.6 billion as of December 31, 2023 [131]. - Total deposits reached $19.9 billion as of December 31, 2024, compared to $19.4 billion as of June 30, 2024, and $18.2 billion as of December 31, 2023 [131]. - The total number of deposit accounts increased to 580,151 at December 31, 2024, from 555,538 at June 30, 2024 [174]. Income and Expenses - Net interest income for the three months ended December 31, 2024, was $280.1 million, compared to $228.6 million for the same period in 2023, reflecting a growth of 22.5% [132]. - Total interest expense increased by 6.0% for the three months ended December 31, 2024, mainly due to an $11.3 million rise in interest expense on demand and savings deposits [146]. - Total non-interest expense increased by $23.5 million, or 19.3%, for the three months ended December 31, 2024, primarily due to higher salaries and related costs [152]. - Non-interest income decreased by $96.3 million, or 77.6%, for the three months ended December 31, 2024, primarily due to the absence of the gain on the FDIC Loan Purchase in the prior year [152]. Capital and Liquidity - The common equity tier 1 capital ratio was 12.42% as of December 31, 2024, compared to 12.01% as of June 30, 2024, indicating improved capital strength [131]. - The Tier 1 leverage ratio was 10.02% as of December 31, 2024, exceeding the minimum requirement of 5.00% [191]. - The company and Bank met all capital adequacy requirements as of December 31, 2024, and were classified as "well capitalized" under regulatory standards [189]. - As of December 31, 2024, the Company had $2,839.1 million available immediately and $4,812.6 million available with additional collateral from the FHLB, indicating strong liquidity [181]. Interest Income and Rate Sensitivity - The average yield on loans increased to 8.37% for the three months ended December 31, 2024, compared to 8.18% for the same period in 2023 [134]. - The interest rate spread improved to 3.91% for the three months ended December 31, 2024, compared to 3.58% for the same period in 2023 [134]. - A 200 basis points increase in interest rates is projected to result in a 5.5% increase in net interest income for the first 12 months [202]. - The sensitivity of market value of equity (MVE) to a 200 basis points increase in interest rates is estimated at a decrease of 1.2% [203]. Regulatory Compliance - The company is subject to regulation by the Federal Reserve and the Office of the Comptroller of the Currency [116][118]. - The company emphasizes the importance of non-GAAP financial measures, with adjusted earnings providing insight into core business performance [128]. Business Segments - The banking business segment focuses on providing a wide range of banking services, including online banking and various lending products [122]. - The securities business segment includes clearing broker-dealer and registered investment advisor custody services [123]. - The company generates non-interest income from various sources, including fees from loans originated for sale and technology transaction processing fees [115].

Loan Growth and Deposits - Loan growth in Q2 Fiscal 2025 reached $3.61 billion, a decrease of 1.66% compared to Q1 Fiscal 2025[2] - Total deposits as of December 31, 2024, amounted to $11.9 billion in consumer direct deposits[12] - $3 billion of deposits adjust with the Federal Funds rate, enhancing deposit rate optionality[10] - Approximately 90% of deposits are FDIC-insured or collateralized, indicating strong risk management[11] - The diversified deposit gathering business lines include $1.1 billion in fiduciary services and $3.5 billion in commercial and treasury management[12] - The company has $450 million of off-balance sheet deposits from Axos Securities, contributing to liquidity[10] Credit Quality and Allowance for Credit Losses - The allowance for credit losses (ACL) and unfunded loan commitments reserve (UCL) totaled $5.8 million[15] - As of December 31, 2024, the Allowance for Credit Losses (ACL) by loan category shows a total of $2,026 million, with a percentage of 1.3% based on gross unpaid principal balance[18] - The credit quality report indicates that non-accrual loans totaled $1,826 million, representing 0.65% of total loans outstanding[19] - The ACL percentage for commercial real estate loans was reported at 1.26%[18] - The allowance for credit losses to loans held for investment was 1.37%, consistent with the previous quarter, indicating stable asset quality[23] Loan Performance - The total loans outstanding as of December 31, 2024, were $18,860 million[19] - Single-family mortgage loans accounted for $409 million, with a non-accrual percentage of 1.33%[19] - Multi-family and commercial mortgage loans were reported at $406 million, with a non-accrual percentage of 0.92%[19] - Commercial real estate loans stood at $604 million, with a non-accrual percentage of 0.43%[19] - Consumer loans, including auto loans, totaled $483 million, with a non-accrual percentage of 0.41%[19] Financial Performance Metrics - Net interest income for the three months ended December 31, 2024, was $280.1 million, compared to $292.0 million for the previous quarter, reflecting a decrease of 6.5%[23] - Net income for the three months ended December 31, 2024, was $104.7 million, compared to $112.3 million in the previous quarter, representing a decline of 5.1%[23] - The efficiency ratio improved to 47.20% from 45.99% in the previous quarter, indicating enhanced operational efficiency[24] - Return on average assets was 1.74%, down from 1.92% in the previous quarter, reflecting a decrease of 18.8%[23] - Return on average common stockholders' equity was 16.97%, compared to 19.12% in the previous quarter, a decline of 11.2%[23] - The net interest margin was 4.83%, down from 5.17% in the previous quarter, indicating a contraction of 6.6%[24] - Non-interest expense was $145.3 million, compared to $147.5 million in the previous quarter, showing a decrease of 1.5%[23] Asset and Equity Growth - Total assets increased to $23,709,422 from $23,569,084, reflecting a growth of 0.6%[21] - Total stockholders' equity rose to $2,521,962 from $2,405,728, representing an increase of 4.8%[21] - Book value per common share improved to $44.17 from $42.14, a growth of 4.8%[21] - Total stockholders' equity as of December 31, 2024, was $2.52 billion, compared to $2.40 billion as of December 31, 2023, reflecting a year-over-year increase of 5%[29] - Tangible book value per common share (non-GAAP) increased to $2.35 as of December 31, 2024, from $2.23 as of December 31, 2023, representing a growth of 5.4%[29] Future Outlook and Strategic Initiatives - The company aims to enhance its credit quality metrics through strategic initiatives in risk management and loan underwriting[20] - Future outlook includes a focus on expanding into new markets and enhancing product offerings to improve overall financial performance[20] - The company is focused on expanding its market presence and enhancing its product offerings through strategic initiatives and potential acquisitions[30] - The management team emphasized ongoing investments in new technologies and product development to drive future growth[30] - Future guidance indicates a positive outlook for revenue growth driven by increased customer acquisition and retention strategies[30] - The company plans to leverage its existing infrastructure to support new product launches and market expansion efforts[30]

Core Viewpoint - Analysts expect Axos Financial to report quarterly earnings of $1.76 per share, reflecting a 10% year-over-year increase, while revenues are projected to decline by 14.1% to $303.03 million [1] Earnings Projections - The consensus EPS estimate has remained unchanged over the past 30 days, indicating analysts' reassessment of their initial projections [1][2] - Revisions to earnings projections are crucial for predicting investor behavior and stock price performance [2] Key Metrics Estimates - Analysts predict a 'Net Interest Margin' of 4.7%, up from 4.6% in the same quarter last year [4] - The 'Efficiency ratio' is expected to reach 48.4%, significantly higher than the previous year's 34.5% [4] - 'Average Interest-Earning Assets' are projected to be $22.93 billion, compared to $20.12 billion a year ago [4] Non-Performing Loans and Income - Estimated 'Total Non-performing loans' are $178.64 million, up from $122.51 million year-over-year [5] - 'Total Non-performing Assets' are expected to be $196.90 million, compared to $129.83 million last year [5] - 'Net Interest Income' is projected at $272.00 million, an increase from $228.61 million in the same quarter last year [5] Non-Interest Income - 'Total Non-Interest Income' is estimated at $31.91 million, slightly up from $31.73 million a year ago [6] - 'Banking and service fees' are projected to be $9.71 million, down from $10.06 million in the same quarter last year [6] Stock Performance - Over the past month, Axos Financial shares have decreased by 1.6%, while the Zacks S&P 500 composite has increased by 2.7% [6] - Axos Financial holds a Zacks Rank 3 (Hold), suggesting its performance will likely align with the overall market [6]

Axos Financial, Inc. (NYSE: AX ), incorporated in 1999 and headquartered in Las Vegas, NV, is a financial services company that primarily offers deposit accounts and mortgage loans through an online banking model.I am a self-taught value investor focusing on Equity REITs, ETFs, special-situation opportunities, portfolio management, and factor investing. My goal is to generate above-average returns with below-average volatility. My ideas are usually long-term but I will respond appropriately to unexpected ev ...

Core Insights - Axos Financial reported a revenue of $320.66 million for the quarter ended September 2024, reflecting a year-over-year increase of 30.5% and surpassing the Zacks Consensus Estimate by 7.03% [1] - The earnings per share (EPS) for the quarter was $1.96, compared to $1.41 in the same quarter last year, resulting in an EPS surprise of 8.89% over the consensus estimate of $1.80 [1] Financial Metrics - Net Interest Margin was reported at 5.2%, exceeding the average estimate of 4.7% from four analysts [3] - The Efficiency Ratio stood at 46%, slightly better than the average estimate of 46.4% from three analysts [3] - Net charge-offs to average loans were 0.2%, higher than the average estimate of 0.1% from three analysts [3] - Average Interest-Earning Assets totaled $22.60 billion, slightly below the average estimate of $22.81 billion from three analysts [3] - Total Non-performing Loans were reported at $176.70 million, significantly higher than the average estimate of $115.54 million from two analysts [3] - Total Non-performing Assets reached $177.41 million, compared to the average estimate of $144.07 million from two analysts [3] - Net Interest Income was $292.05 million, surpassing the average estimate of $266.31 million from four analysts [3] - Total Non-Interest Income was $28.61 million, below the average estimate of $33.94 million from four analysts [3] - Mortgage Banking Income was $0.45 million, significantly lower than the average estimate of $2.57 million from three analysts [3] - Banking and Service Fees amounted to $8.61 million, slightly above the average estimate of $8.53 million from two analysts [3] - Prepayment Penalty Fee Income was $0.54 million, compared to the average estimate of $2 million from two analysts [3] Stock Performance - Over the past month, shares of Axos Financial have returned +9.4%, outperforming the Zacks S&P 500 composite's +1.8% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Loan Portfolio - Axos' Single Family Mortgage & Warehouse loan portfolio decreased by $115 million from Q4 FY24 to Q1 FY25[1] - Jumbo Mortgage decreased from $3.922 billion to $3.807 billion[1] - Multifamily loan portfolio decreased by $178 million from $2.541 billion to $2.363 billion[2] - Commercial Real Estate (CRE) Specialty increased by $189 million, from $5.189 billion to $5.378 billion[2] - Commercial & Industrial Non-RE loans increased by $171 million, from $1.797 billion to $1.968 billion[2] - Total loans outstanding increased slightly by $23 million, from $19.803 billion to $19.826 billion[2] FDIC Loan Purchase - Axos completed a purchase of $1.25 billion of loans from the FDIC at a 37% discount on December 7, 2023[4] - The weighted average yield before accretion of discount for the total CRE loans purchased from FDIC is 7.4%[4] - The weighted average LTV for the total CRE loans purchased from FDIC is 52%[4] Credit Quality and Allowance for Credit Losses (ACL) - Total loans outstanding as of September 30, 2024, were $19.826 billion with an ACL of $264 million, representing 1.3%[13] - Non-accrual loans to total loans was 0.89% as of September 30, 2024[15] Deposits - Approximately 90% of deposits are FDIC-insured or collateralized[11]

Financial Data and Key Metrics - Net income for Q1 2025 was $112 million, up 36% YoY from $82.7 million [10] - Earnings per share grew 40% YoY to $1.93 [10] - Return on average common equity was 19.1% for the quarter [7] - Tangible book value per share grew 28% YoY [7] - Net interest margin increased to 5.17%, up 81 bps YoY and 52 bps QoQ [8] - Loan balances grew 0.3% QoQ and 13.7% YoY to $19.3 billion [6] - Deposits grew by $614 million QoQ, with 96% coming from interest-bearing demand and savings accounts [6][19] Business Line Performance - Single-family mortgage warehouse and C&I loan balances grew, offset by declines in single-family jumbo mortgage, multifamily, and auto loans [10] - Average loan yields increased to 9.01%, up 47 bps QoQ and 116 bps YoY [11] - Non-performing assets increased in single-family jumbo mortgages ($13.3 million) and commercial real estate ($14.5 million) [13][14] - C&I asset-based and cash flow lending saw a $40 million increase in non-performing assets [16] - Axos Clearing deposits remained flat at $1.3 billion, with $800 million on the balance sheet and $450 million at partner banks [30] Market and Geographic Performance - Consumer and small business deposits represented 60% of total deposits, while treasury management accounted for 20% [20] - Axos Fiduciary Services and Axos Security (custody and clearing) represented 6% and 4% of deposits, respectively [20] - Client cash sorting stabilized at 3% of assets under custody, down from the historic range of 6%-7% [21] Strategy and Industry Competition - The company is focused on growing assets under custody and cash balances by adding new assets from existing and new advisors [21] - Axos is managing interest rate risk by adjusting deposit pricing and extending the duration of liabilities [22][23] - The company is optimistic about returning to high single-digit to low-teens loan growth, driven by strong demand in fund finance, ABL, and select C&I lending businesses [29] - Axos is leveraging its white-label banking platform to attract new clients and enhance deposit and lending product offerings [33] Management Commentary on Operating Environment and Outlook - Management highlighted strong demand in C&I lending but noted increased pricing pressure and competition [43] - The company expects to maintain its net interest margin within the 4.25%-4.35% range, excluding the FDIC loan benefit [24] - Management remains confident in the credit quality of the loan book, despite some idiosyncratic increases in non-performing assets [15][17] Other Important Information - The company allocated a $10 million specific loan provision for a C&I loan classified as nonaccrual [17] - Non-interest expenses increased by $6.9 million QoQ, driven by higher salaries and benefits related to new hires [39] - The loan pipeline remains strong at $1.9 billion, with growth expected in SFR jumbo mortgages, multifamily, and commercial loans [40] Q&A Session Summary Question: Competition and Loan Pricing - Management noted increased pricing pressure in certain verticals, particularly in C&I lending, but remains confident in achieving loan growth [43] Question: Fee Income and Rate Sensitivity - Fee income was impacted by prepayment penalty fees and a mark on the servicing book due to rate declines [44][45] - Management expects fee income growth in the securities business as net new assets increase [46] Question: Deposit Repricing and Growth Opportunities - The company has successfully repriced deposits ahead of rate cuts and sees growth opportunities in C&I verticals and middle-market lending [65][66] Question: Commercial Real Estate Exposure - Axos remains interested in growing its commercial real estate book but faces challenges due to fewer deals and early repayments by bridge lenders [84] Question: Loan Pricing and Margin Outlook - Management expects some pricing concessions to maintain loan growth but remains optimistic about the margin outlook, supported by loan repricing and deposit cost management [81][98] Question: Loan Underwriting and Participation - The company emphasized its strong underwriting standards, particularly in commercial real estate, and noted variations in loan participation across different business lines [89][92]

Core Viewpoint - Axos Financial reported strong quarterly earnings, exceeding expectations and showing significant year-over-year growth in both earnings and revenues [1][2]. Financial Performance - Quarterly earnings per share (EPS) were $1.96, surpassing the Zacks Consensus Estimate of $1.80, and up from $1.41 a year ago, representing an earnings surprise of 8.89% [1]. - Revenues for the quarter ended September 2024 were $320.66 million, exceeding the Zacks Consensus Estimate by 7.03%, compared to $245.66 million in the same quarter last year [2]. Market Performance - Axos Financial shares have increased approximately 21.4% since the beginning of the year, while the S&P 500 has gained 22.3% [3]. - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6]. Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.80, with projected revenues of $302.8 million, and for the current fiscal year, the EPS estimate is $7.03 on revenues of $1.21 billion [7]. - The outlook for the financial services industry, particularly the Financial - Miscellaneous Services sector, is favorable, ranking in the top 35% of Zacks industries, which historically outperforms the lower-ranked industries [8].

The following tables set forth the Company's financial assets and liabilities measured at fair value on a recurring basis at September 30, 2024 and June 30, 2024. Assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement: | --- | --- | --- | --- | --- | --- | --- | |-------------------------------------------------------------------------|-------|---------------------------------------------------|-----------|------------------------ ...

Loan Growth and Financial Performance - Axos reported a loan growth of $19.826 billion in Q1 FY25, an increase of $23 million from Q4 FY24[2] - The company completed a purchase of $1.25 billion of loans from the FDIC at a 37% discount on December 7, 2023[4] - Total net loans increased to $19,280,609 thousand from $18,733,455 thousand, representing a growth of 2.85% quarter-over-quarter[18] - Loan originations for sale increased to $69,570 thousand from $52,858 thousand year-over-year, representing a growth of 31.6%[19] - Net interest income for the three months ended September 30, 2024, was $292,048 thousand, an increase from $211,155 thousand in the same period last year, representing a growth of 38.3%[19] - Net income before income taxes was $159,192 thousand, up from $118,156 thousand in the same quarter last year, marking a growth of 34.7%[19] - Adjusted earnings per diluted common share for the quarter was $1.93, compared to $1.38 in the same quarter last year, an increase of 39.9%[20] - The company reported a net interest margin of 4.92% for the quarter, compared to 4.46% in the same quarter last year, indicating an improvement in profitability[19] Credit Quality and Allowance for Losses - The allowance for credit losses (ACL) was $264 million as of September 30, 2024, with a total loan balance of $19.826 billion[12] - Non-accrual loans for multifamily and commercial mortgage were 0.85% and 0.66% respectively as of September 30, 2024[15] - The allowance for credit losses stood at $263,854 thousand, reflecting a slight increase from $260,542 thousand in the prior quarter[18] - Provision for credit losses increased to $14,000 thousand for the quarter, compared to $7,000 thousand in the same quarter of the previous year, indicating a rise of 100%[19] Deposits and Capital - Approximately 90% of deposits are FDIC-insured or collateralized, totaling $19.173 billion as of September 30, 2024[11] - Total deposits rose to $19,973,329 thousand, up 3.16% from $19,359,217 thousand in the previous quarter[18] - The Tier 1 capital ratio to risk-weighted assets remained stable at 11.47%[18] - Axos Securities contributed approximately $450 million of off-balance sheet deposits, enhancing deposit rate optionality[10] Loan Characteristics and Market Presence - As of September 30, 2024, 64% of fixed and hybrid rate loan balances will reprice within 3 years, and 91% will reprice within 5 years[10] - The weighted average loan-to-value (LTV) for residential loans was 61.3% as of September 30, 2024[4] - The company reported a total of $1,912 million in multifamily loans with a weighted average LTV of 40%[7] - The company serves approximately 40% of U.S. Chapter 7 bankruptcy cases, enhancing its market presence[11] Other Financial Metrics - Customer, broker-dealer, and clearing receivables decreased to $262,774 thousand, down from $292,630 thousand, a decline of 10.19%[18] - Common shares outstanding at the end of the period increased to 57,092,216, compared to 56,894,565 in the previous quarter[18] - Securities available-for-sale decreased to $137,996 thousand from $141,611 thousand, a decline of 2.18%[18] - The total stockholders' equity data was not provided, indicating a focus on other financial metrics[18] - The net capital as a percentage of aggregate debit items was not specified, indicating a potential area for further analysis[18] - The company maintained advances from the FHLB at $90,000 thousand, consistent across reporting periods[18] - The weighted average number of diluted common shares outstanding was 58,168,468 for the quarter, slightly up from 58,037,698 in the previous quarter[21] - The efficiency ratio for the quarter was not explicitly stated but is calculated as non-interest expense as a percentage of the aggregate of net interest income and non-interest income[19]